Posted To: Mortgage Rate Watch
Fannie Mae and Freddie Mac are the two government sponsored agencies that guarantee timely payment of principal and interest to the investors who front the money that finances the American mortgage market. This guarantee means that more investors are willing to participate and at more advantageous rates for homeowners. Naturally, not every mortgage is repaid perfectly. Sometimes, payments are missed. In more serious situations, loans can end in foreclosure, short sales, etc. In those cases, the housing agencies are there to act as a backstop ensuring investors are made whole. In order to foot that bill, Fannie and Freddie collect fees on loans that they guarantee. Shockingly, these are called guarantee fees (or guaranty fees” with a “Y” in the case of Fannie Mae). The mortgage industry and…(read more)
Source: Mortgage News Daily
